One of China’s public sector commodities trader has become the biggest dollar bond defaulter in 20 years, according to Bloomberg reports.
Tewoo Group Corp has announced results of its unprecedented debt restructuring that has seen the majority of its investors accepting heavy losses.
This is expected to reshape investors’ perceptions about government-owned borrowers whose identity has for years offered a relatively strong sense of security, said the report.
The company is offering a road-map for resolving similar debt crises in the future as the prospect of more failures by state-backed firms looms, the reports said, adding, the one-time Fortune Global 500 company from the northern port city of Tianjin said dollar bond investors representing 57% of the total $1.25 billion have agreed to be paid just 37 to 67 cents on the dollar, depending on the maturity of the debt.
Bondholders representing 22.6% of these bonds have voted to exchange their debt for new bonds with sharply lower coupons to be issued by Tewoo’s offshore debt manager, a state asset manager from Tianjin.
“This is one form of default based on our definition,” said Ivan Chung, a Hong Kong-based analyst at Moody’s Investors Service, noting that the debt revamp has resulted in losses for investors.